“Provident fund is a fund which is composed of contributions made by the employee during the time he/she worked along with an equal contribution by his employer”

RATE : Provident fund is calculated as 12% of his/her basic salary & the same amount is contributed by the employer.however employee have a option to contribution more than 12%

DEPOSIT OF CONTRIBUTIONS:

Employers contribution of 12% of basic salary is totally deposited in provident fund account whereas out of employees contribution of 12% , 3.67% is contributed to provident fund & 8.33% is deposited in Pension scheme.

IS IT COMPULSORY FOR ALL EMPLOYEES TO CONTRIBUTE TO THE PROVIDENT FUND?

employees drawing basic salary upto Rs. 1,5000/- have to compulsory contribute to the provident fund . however , employees drawing above Rs. 15,000/- say Rs. 15,001 have an option to become member of the provident fund.

ADVANTAGES:

1. Tax benefit u/s 80C
2. retirement benefit
3. withdrawal benefit

NOTES:
1.However if a person withdraw the amount of provident fund before the end of 5 years all the benefits he got u/s 80C against Provident fund will get reversed & added with the income in which withdrawal has been made & fully taxable . So be careful about the timing of withdrawal.
2.Benefits under the pension fund is available only after the continuous service of 9.6 years & after completing the age of 58 years . continuous service of ten year does not means to work with the same company but every time when a person change job ,the PF account must be transferred & continuous for ten years.

FORMS REQUIRED:

1.Form NO. 2 is required to be filled to become the member of the provident fund.it is called a Nomination Form .
2.Form no. 13 is required for transfer of Provident fund.
3.Form no. 19 is required for withdrawal of provident fund
4. Form no. 10C is required for withdrawal of pension fund.

All the forms are available with the HR department of the company .

provident fund plays a very important role because at the time of retirement a person get a healthy sum & pension amount subject to the conditions fulfilled as per provident fund Act.

My company had mentioned in my offer letter as (Company Contribution to E.P.F) component i.e. 12% of Basic. I have also opted for PF Scheme. So in every month’s pay slip, 12% of basic is only deducted from my salary but the component which was added by company in my offer letter is never shown in my salary slip. Even when I checked my EPF Balance online, it shows only the amount deducted from my salary slip. So I still didn’t get it, where is that 12% of basic which was agreed by company to pay in my offer letter, gone?

Company contribution to PPF mentioned in offer letter for CTC purpose . that means what company is offered to you includes their contribution to PPF also .
Company’s contribution to PPF will never show in your payslip becayuse that is part of CTC only. In payslip only part of PF belongs to employee part will show .
Secondly PF contribution by company will be devided in two parts :

1.8.33% for pension fund
2.3.67% for Providend fund.
because of that when you are checking EPF balance online only yours part & 3.67% part of employers contribution will show.

further when you withdraw PF you will get two different amounts one for PF & other for Pension fund later on .

So no need to worry . company is bound to pay 12% in PF account of yours .

Dear Sir,I got a Job offer in a company, when I see the salary break up the ctc is 2.34 pa,In CTC when they add employer’s contribution towards pf and Insurance my total CTC comes to 19500 per moth,In deductions they are deducting employee contribution and employer’s contribution towards PF ,780,780 respectively, after all variables I am getting 17610 as take home and the deductions per month are Rs.1890/-, so I didn’t get where company contributing PF to me Please give suggestion

if i wish to contribute more in my salary as “pf”. can i able to do it?is it fixed?if i do it more than the prescribed percentage,is it under tax exemption?what s the timing interval of employee to get their pf?

Dear Sir,
I have withdrawn my PF money from my employer after 6.8 years of continuous service as I have got a job abroad. Do i have to pay tax on the PF or the interest earned on it. Both employee and employer PF deductions were part of my CTC.

My monthly gross salary is Rs. 34220(CTC is 35000) and basic salary is 15399. PF deducted is 780 from my side and 780 is employer side(35000-780). As per PF act 12% of basic is for PF can you please clarify it how Rs 780 is employee and 780 from employer contribution.

My company deduct 3600 ppf from salary due to new rule.
In salary slip they have added there contribution as well. as 1800 and in deduction 1800 from our side. Is it feasable. Is total amount shoud be in 80c

As per new rule minimum wage limit increased to Rs 15000 from RS 6500.
Company has deducted Rs 1800 from your salary plus employer share aslo. You will get deduction U/S 80C for your share only i.e. Rs 1800 p.m. now onwards.
this is ok from the company side.

One thing i just wanted to tell you that this rule become applicable from Sep-14.

Hi Ranjeet,
1)I have not opted for EPF in my company. Does that mean I will get the in hand salary which will include both employee and employer contribution to EPF since its a part of my CTC or I will loose out on the employer contribution since I have not opted for it?
2) The interest on employee and employer contribution is taxable at maturity?
Thanks

Don’t you think its unfair, suppose if employee is getting 8,000 per month & PF deduction from his/her salary is both ways “employee & employer” according to CTC then think about his/her take away home.

That can be possible if company is not registered for PF only .If the strength of the company is less than 20 people , it is not mandatory for the company to go for PF registration .
other case may be if all people are getting higher salaries like if basis salary is more than Rs 15000 for all employees it can be possible .

there is no problem with that , you can join the company whenever it will become applicable , PF deduction will also start .

This is fine my dear , once you have withdrawn PF before continous service of 5 year , 10% will be deducted as TDS . If you think you are not coming tax ambit, you can claim the same by filing Income tax return.

Dear Sir,
We are Dyeing nd Printing Industry in Gujarat. we Have approx 225 employees working in factory. Now, we have plans to cover all staff under PF/ESI scheme. My few queries are as below:
1) PF/ESI employer contribution is calculated on Total Salary or Basic Salary..? (for employees drawing below 15k salary)
2)is it possible if basic salary is below the Minimum Wages per month (26 days) i.e Rs.7800/- . For Example: If an employee draws Rs.10,000/- Pm and his Basic is Rs.4000/- (40% of gross). On what amount will the PF be calculated for employer’s contribution. ?
Thanks
Hardik.

1. PF / ESI both are deducted on Basic salary . In both the case if employee in drawing below Rs 15000 PF and ESI will become applicable .
2. Yes it can be. Minimum wage per month is total wages . Basis salary could be lower and generally it is kept low because basic salary is fully taxable & both PF and Deduction are made on basic portion . Employers contribution of PF is fixed on basic salary @12 % , employee shall have option to opt for higher deduction from their salary.

I was working for a company from 10th April 2012 to 31st March 2015. I resigned and joined a smaller company with employee strength 17 only and hence no PF account. I withdrew my PF and recieved the amount with tax as I submitted 15G.

The PF amount was 3,00,000 INR. Is there a clause of tax exemption as my present company does not have PF account or I have to pay the tax in this financial year?

Tax on PF withdrawl is exempt only when you worked in a company for 5 years , in your case you left the ogranisation within 3 years. So minimum deduction of tax will be 10% .
Secondly 15G is submitted for declaration that you don’t have any other income & you are coming under tax ambit.

but like you said you had joined another organisation , you are earning .

My monthly contribution to PF (12% of salary) is 5100, hence company is paying 5100 too (EPF+EPS). Company’s contribution is not showing in my payslip which is expected.

My Questions are:

1) If I opt for a fixed PF of 780 pm (instead of 5100), I will get that amount in my Payslip. Will it become taxable taxable?

2) Now that I cannot see employer contribution of 5100, does it means that I am not paying tax for it to? This effectively means I am getting tax benefit of 1.5lpa + 5100×12 = 2,11,200? Is it correct?

Dos all these means if I opt to choose for lower PF amount I will end up paying much more tax?

I have invested in tax savings scheme for another 90K to get 5100*12 + 90000=1.5lpa full benefit. But It I reduce my PF to 780 pm and invest rest of 1,50,000 – 780*12=1,49,000 I still see that I will be end up paying extra tax due to employer contribution – 5100-780=4320*12=51,840 which will be in my payslips.

Please clarify if I am missing any key point. I would like to take a decision where I can save maximum tax.

Hope you are doing well . I had seen your query, About PF some points should always be very clear .

1.Employee portion of PF amount is a non taxable amount & deduction u/s 80C is available within the limit of 150 LPA.
2.Employer contribution is always taxable for the employee because employer is getting deduction for the same as expense like salary and debited to profit and loss account .
hence double deduction will not be available to both employee & employer.

Now i come to your points

1.if you opt for Rs 780 pm , your portion of amount will be exempt & employer portion of Rs 780 will be taxable . see if you opt for 780 pm , employer will also start Rs. 780 for their portion , hence this is a loss making decision for you . my advise to keep going with Rs 5100 pm
2.Generally employers portion is included in CTC part , only your portion of PF of Rs 5100*12 Rs 61200 is exempted from tax , employer portion of the same amount will be taxable because employer is getting benefit of that amount as expense to the company . Golden rule applies , for one expense two person cannot take benefit of same kind. it is expense for one & income for other .
further you will get maximum deduction of 1.5lpa . your calculation of Rs 211200 is not correct .

PF is some kind of investment which is tax free when you withdraw the amount subject to some conditions.

As i narrated above you will get benefit only for your portion of PF under 80C . hence forget employers portion while planning for limit of 1.5lpa.